Business PPT

My neighbor questioned me, “Why would anyone sell a successful company?”. He could not be with you why anyone would leave a business that was doing well. Of course successful companies get sold all the time.

So why do these business owners sell? The small answer is that most closely held businesses sell for human reasons, such as burn out, retirement, illness, partnership disputes, family issues or other personal reasons. Usually the business is fine but the human being running the business needs a change. To be with you this better it is key to be with you the other options for exiting a business.

Close the Business/Liquidation

Closing a business that is profitable by no means makes sense. Even if the assets are liquidated the fee is likely to be pennies on the dollar versus selling the business as a going concern with employees, customers and a reputation that is intact. Not only does the business owner get the lowest value but the employees, vendors and customers are hurt by this type of exit.

Accident, Illness or Fatality

No one wants to exit their business this way, but many do. The loss of an owner not only makes tremendous issues for the family but also makes a leadership void in the business. Even the most competent management can struggle when a key business leader is lost to a serious accident, illness or fatality. No one plans for this type of exit but many end up exiting the business this way because they failed to start an alternate plot.

Succession

Succession by a family member or key employee has its benefits. They know the business, its product or service, employees, customers and vendors. Succession can be operationally successful for the exiting owner if they make sure the successor is carefully elected, qualified and groomed for the spot. The owner must be precise not to make an emotional scale of a relative or favorite employee but instead choose the successor with the right skills to lead the company into the future. You are not seeking an “Employee” mentality but an “Owner” mentality. If that rare person can be found in the business who can make the transition to Owner, they often do not have the cash needed to buy the business. They are also likely to want to pay less for the business as familiarity will blind them to many of the value drivers of the company. So although succession can be operationally successful it is rarely a financial success for the outgoing owner.

Sell

Closing or liquidating the business minimizes the value to the owner. Accident, illness or fatality forces the issue on the owner. Succession provided a very limited pool of options with limited financial reward.

Selling on the other hand allows the business owner to choose their ideal timing, maximize the value of the business they worked so hard to build, coordinate the use of the sale proceeds for financial plotting and align their personal goals with the sale of a business. Selling the business allows the business owner to start a wealth event and often significant on-going passive income without having to run their business.

Whatever they are, human reasons are always pushing and pulling on a business owner. Burn out, stress, divorce, illness, partner disputes and limited growth capital are some of the human reasons that push owners out of the business. Retirement, enjoying life, relocating, a new business opportunity and passive income are some of the reasons that pull a business owner out. Whatever the motivation, the fundamental reason a business owner chooses a sale as their ideal exit plot is control. The business owner chooses to be with you the value of their business and to proactively pursue the right buyer and the right fee. By selling a business you choose to exit your business by scale, not by force.

The qualified team at Sunbelt Midwest can help you confidentially sell or buy a business in Minneapolis, Milwaukee, Chicago, and surrounding areas. For more information check out our site at http://www.sunbeltmidwest.com.